Correlation Between Montauk Renewables and Celo

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Can any of the company-specific risk be diversified away by investing in both Montauk Renewables and Celo at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Montauk Renewables and Celo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Montauk Renewables and Celo, you can compare the effects of market volatilities on Montauk Renewables and Celo and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Montauk Renewables with a short position of Celo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Montauk Renewables and Celo.

Diversification Opportunities for Montauk Renewables and Celo

0.81
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Montauk and Celo is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Montauk Renewables and Celo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Celo and Montauk Renewables is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Montauk Renewables are associated (or correlated) with Celo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Celo has no effect on the direction of Montauk Renewables i.e., Montauk Renewables and Celo go up and down completely randomly.

Pair Corralation between Montauk Renewables and Celo

Given the investment horizon of 90 days Montauk Renewables is expected to under-perform the Celo. But the stock apears to be less risky and, when comparing its historical volatility, Montauk Renewables is 2.41 times less risky than Celo. The stock trades about -0.26 of its potential returns per unit of risk. The Celo is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  71.00  in Celo on September 3, 2022 and sell it today you would lose (12.00)  from holding Celo or give up 16.9% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy95.45%
ValuesDaily Returns

Montauk Renewables  vs.  Celo

 Performance (%) 
       Timeline  
Montauk Renewables 
Montauk Performance
0 of 100
Over the last 90 days Montauk Renewables has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2023. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Montauk Price Channel

Celo 
Celo Performance
0 of 100
Over the last 90 days Celo has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Crypto's essential indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for Celo investors.

Celo Price Channel

Montauk Renewables and Celo Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Montauk Renewables and Celo

The main advantage of trading using opposite Montauk Renewables and Celo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Montauk Renewables position performs unexpectedly, Celo can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Celo will offset losses from the drop in Celo's long position.
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The idea behind Montauk Renewables and Celo pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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Check out your portfolio center. Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.

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